JERUSALEM -- Another car bombing brought the Mideast peace process came to another sudden halt yesterday, this time a car bombing in a Jerusalem market that ended up killing only the two suicide bombers but wounding 21 Israelis.

The bombing took place as Israel's Cabinet was meeting a mile away to consider endorsing the latest interim peace agreement between Israel and the Palestinians.

The Israelis immediately put off further consideration of the deal.

The bombing, reminiscent of an attack in July 1997 that killed 16 people in the same Mahane Yehuda Market, may give hard-liners in the government of Prime Minister Benjamin Netanyahu the leverage they need to derail the Oct. 23 accord.

Palestinian leaders joined Israelis in condemning the attack and said they hoped it wouldn't halt moves toward peace.

Saeb Erekat, the chief Palestinian negotiator, said the terrorists want to sabotage the peace process, which seemed back on track after a 19-month stalemate.

"We cannot just stop the peace process," said Erekat. "If they get what they want, what we saw today in the tragic explosion in Jerusalem, which we condemn, would be only the tip of the iceberg of what extremists from both sides would do in the

future."

Police said an anonymous caller, claiming to be from the Islamic militant group Hamas, on which Palestinians have been clamping down under intense Israeli pressure, took responsibility for the attack. But the claim is disputed.

"We know with a high degree of certainty that the attack today was carried out by the Islamic Jihad," said Justice Minister Tsahi Hangebi. "The Islamic Jihad infrastructure has been operating without obstruction for the past five years."

Islamic Jihad is not believed to have conducted a major bombing since its leader, Fathi Shikaki, was killed in Malta three years ago.

Officials identified one of the dead bombers as Yusef Ali Mohammed Zughayar, 18, an Islamic Jihad activist from Anata, a refugee camp north of Jerusalem. The other reportedly came from the Palestinian-controlled areas. His name was not given, but Palestinian sources said the police knew his identity.

The car carrying the suicide bombers blew up on a main city street that runs alongside the outdoor market. Police suspect the terrorists may have sought to replay the 1997 bombing.

In 1997, two terrorists walked into the center of the market -- a series of lanes and alleyways lined with produce, fish and meat stalls -- and detonated their bombs within seconds of each other. Suitcases were found in the ruins of the car yesterday.

'Smoke, smoke!'

Yesterday's explosion occurred as the car pulled in front of the main entrance to the market. Witnesses said they first heard a small boom and saw thick black smoke billowing from the car.

The smoke alerted many in the area to run for cover before a second explosion, witnesses said.

"I ran into the store. People ran all over. We saw pieces of iron and metal and plastic flying in the direction of the market alley. And suddenly I heard a boom."

The blast was the second terrorist attempt to inflict large casualties among Israelis since the signing of the Wye River Memorandum.

Several times this week, Netanyahu delayed a Cabinet vote on the pact with requests for the Palestinians that some analysts believe were aimed at mollifying opponents to the accord.

Several hours after the bombing, the Israeli Cabinet voted overwhelmingly to suspend its talks on the agreement and linked resumption to two key items.

The ministers, who include opponents to the plan, insisted the Palestinian authority prove that it is taking "diligent and relentless steps to fight the war on terror and its infrastructure."

Charter revision

And they issued a potentially more problematic request -- that Arafat call for a vote by the Palestinian National Council to affirm the repeal of articles in its charter that call for the destruction of Israel.

The Palestinians say the Wye pact does not require an actual vote on the issue. The agreement does not specify how the Palestinians are to "reaffirm" the revocation of the charter sections.

Palestinian leader Yasser Arafat said he told the prime minister in a phone conversation that Palestinian security forces "are putting 100 percent effort and of course we are seeking to reach a 100 percent result" in fighting those who sent the bombers.

"First of all, it should be clear that we condemn the criminal and terrorist attack whose aim is to harm the peace process," Arafat told Israeli television.

"We should work together, Israelis and Palestinians, to fight these terror acts. At the same time we are fully committed to fulfill what is said in the agreements about pursuing these people, fighting them and detaining them."

President Clinton said in Washington that the "enemies of peace" are trying to derail the "courageous steps" taken by the Israelis and Palestinians at the Wye River Plantation on Maryland's Eastern Shore.